Justice Questions United-pan Am Deal

September 19, 1985|By Chicago Tribune

The Justice Department has objected to United Airlines' $750 million acquisition of Pan American World Airways' Pacific routes, saying the plan could ''substantially reduce'' airline competition between the United States and Tokyo.

In a 97-page filing, the department's antitrust division ruled Tuesday that the agreement violates merger guidelines. It urged the Transportation Department to require United to sell one of Pan Am's three Tokyo-to-U.S. routes, either Los Angeles, San Francisco or Seattle-Portland.

Some takeoff and landing slots at Tokyo's Narita Airport and the right to fly to other points in the Orient from Tokyo might have to be divested as well ''if necessary to preserve competition,'' the Justice Department said.

Later Tuesday, United said its board has not determined whether it would ''go forward with the transaction'' if the Transportation Department follows the Justice Department's recommendation. United's agreement with Pan Am allows the airline to cancel the acquisition under such conditions, United said.

Transportation Secretary Elizabeth Dole is expected to decide on the United-Pan Am agreement

by Oct. 31. The deal also needs President Reagan's approval and the transfer of landing rights by a number of foreign governments.

The Justice Department's objection apparently came as a surprise to United, which has touted the Pan Am agreement as ''historic'' and ''a prime example of airline deregulation at work.''

In a speech Friday in Chicago, Richard J. Ferris, chairman of Chicago- based UAL Inc., United's parent company, said the Justice Department did not raise major concerns about antitrust violations at Transportation Department hearings on the Pan Am deal. He expressed confidence then that United would win approval from the Transportation Department.

In its statement Tuesday, United contended that ''the facts do not justify'' the Justice Department's recommendation. The company reiterated its confidence in winning Transportation Department approval ''without any such condition.''

The proposed acquisition would give United a Tokyo hub, landing rights in a dozen other cities in Asia and the South Pacific, 18 jets and 2,700 Pan Am workers.